No one in the markets is scared, and that should scare everyone

"The fact that the fear is gone is the main reason why we should be worried," Joachim Fels, a global economic advisor to PIMCO said.

Markets are rallying aggressively as the global economic expansion continues into its 10th year.

Fels, however, urged caution, pointing to rising inflation as a possible source of woe for investors.

"The only thing we have to fear is fear itself," Franklin Roosevelt famously said in his in inaugural address as US president.

Fast forward 85 years, and the thing that should be scaring us — from a financial market perspective at least — is the lack of fear. That's according to a senior figure at PIMCO, the dominant fixed-income-focused money manager.

"That means most investors are now pretty fully invested and that means they will want to get out if the markets start to correct — exacerbating the downdraft."

Fels' basic argument is that investors are now so used to the good times, that they are simply not prepared for the fact that things could start to turn, especially as inflation rises and central banks prepare to normalise monetary policy.

This is especially true given that global equity markets are enjoying a somewhat spectacular start to the year, and according to data cited by Bloomberg, the MSCI World Index — which tracks major stock indices around the world — is up close to 5% in the first three weeks of January, it's best start to a year in three decades.

"We do worry about a coming correction," Fels said, arguing that a healthy dose of worry could be a positive for investors right now.

"We've seen a big rally, markets are still going higher, but this is now a time for caution, and for prudence. We think that first of all you need some exposure to rising inflation."